Tackling an unexpected challenge

You’d have to be heartless not to feel for SA Rugby as the governing body contends with the financial ramifications of the coronavirus pandemic, writes SIMNIKIWE XABANISA.

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Thanks to the muddied waters that flow under the bridge between media and sporting organisations, it’s tough to feel empathy for any of them. But you’d have to be heartless not to feel for SA Rugby at the moment. Winning a World Cup is supposed to be a guaranteed gateway to untold riches, emanating from the spin-offs of being the team to beat.

World Rugby doesn’t give World Cup victors prize money for winning because its members agreed to forgo a winner’s cheque in favour of payments in the cycle between tournaments.

For SA Rugby, this would show itself in sponsors paying top dollar to be associated with world champions, a British & Irish Lions tour like the Springboks have in the offing and cash injection from a company like CVC Capital Partners, the private equity fund looking to buy a 20% stake in it.

Regardless of the goodwill that would have ensued from the Boks winning the World Cup, SA Rugby would still struggle to get a windfall from it.

By explanation, there’s a simple example: main sponsor MTN, who replaced Absa on the front of the jersey in a three-year deal in 2017, were paying around R50-million a year. But the issue is, the bank used to pay R90-million when they were only commercial partners.

MTN began negotiations to renew before the World Cup but even if they doubled the sponsorship amount, SA Rugby would only earn what they did six years ago. And, as if that wasn’t enough, enter the coronavirus outbreak that has changed the face of sport as we know it.

Rugby hasn’t been immune to the postponements, suspensions and cancellations that have resulted in the granddaddy of all sporting events – the Olympics – being pushed back a year.

As things stand, SA Rugby’s problems centre on the Super Rugby and Varsity Cup seasons not being completed, and the start of the SuperSport Rugby Challenge delayed indefinitely. While that may seem a more pressing problem for the unions, franchises and broadcaster, it’s ultimately SA Rugby’s issue.

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Also, the coronavirus could affect the incoming tour games against Scotland and Georgia in July, a period during which they would have sponsors and a broadcaster paying for content they are not getting – as is currently the case with Super Rugby and the Varsity Cup.

The top brass of SA Rugby have been smart in their preparation for next year’s British & Irish Lions tour by recruiting UK-based sponsorship agency CSM Sports and Entertainment to help manage their sponsorship rights for the trip, along with the British & Irish Lions Company.

The general idea was to engage new partners for the venture in a move which also unbundled the current sponsors so they can negotiate standalone deals specifically for the Lions tour.

But smart as that idea was, they can’t have factored in the indefinite global suspension of the game leading to drastic pay cuts in Europe and Australia, a step which should filter down to SA, but also to how much sponsors are willing to pay, let alone their eagerness to sign up for new ventures. The sponsors will be holding the upper hand in the negotiations.

As for CVC Capital Partners, having watched their investments in the English Premier League, the Pro14 and the Six Nations burned by the coronavirus, will they be wary of investing with SA Rugby, if the deal hasn’t already been sealed?

And we thought winning the World Cup was a cure to all financial ills.

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